Should You Financially Emigrate?

Many South African expats leave South Africa with their minds firmly focussed on their overseas opportunities – whether they are leaving to explore the world or are starting a new job abroad.

It is only once they are settled in their new country and have spent a few years on foreign soil that their thoughts turn to whether it makes sense to financially emigrate. However, many don’t know what the process involves or whether it makes financial sense to do so.

Why choose financial emigration?

For expats who still have a lot of their capital tied up in South Africa, it can make good financial sense since one of the main benefits of financial emigration is the establishment of the free flow of capital from South Africa – to your new home country abroad.

The important thing to realise is that financial emigration does not affect your South African citizenship or your right to reside in the country. You do not have to give up your passport, and if you so choose, you can return to South Africa and continue to live and work there in the future. 

What does financial emigration mean?

Financial emigration from South Africa is simply the process of exiting South Africa financially and means your status – for exchange control purposes – changes from resident to non-resident with the South African Reserve Bank (SARB). That’s all!

The benefits of financial emigration

As a financial emigrant, all your capital will be consolidated under one roof in a capital account that is managed by your financial emigration specialist at your appointed bank who facilitated your financial emigration. From this account, you can instruct your bank to pay funds to any international account.

The financial emigration benefits of a free-flow of capital includes the transfer  of the full capital value of your retirement annuity proceeds offshore, even before you turn the age of 55. The cash from your retirement annuity can be used for any purpose – from buying a new home to investing in your children’s education.

On completing your financial emigration, you may also transfer any South African source inheritance abroad, any passive income, for example rent, dividends, director’s fees and income from discretionary or vesting trusts and the proceeds of any assets declared in your emigration application.

How to financially emigrate

In order to financially emigrate your South African tax affairs must be in order and up-to-date.  FinGlobal can assist with the financial emigration process by making formal application to SARB. If you have lived outside of South Africa for more than five years, you do not have to submit a tax clearance provided all your remaining assets and liabilities are declared. Once SARB has approved your financial emigration status, you need to open up a non-resident bank account with the bank that submitted your application to SARB.

If you are planning on withdrawing your retirement annuity, you need to be aware that the withdrawal is subject to tax and an application for a tax directive needs to be made to SARS. Once SARS has approved the application and the tax has been deducted, and your bank has seen proof of both your SARS tax clearance and financial emigration, the funds can be placed in your non-resident bank account.

When your funds have reflected in your non-resident account, your bank runs the necessary checks and once they have given their approval, your funds can be released into the bank account of your country of residence.

How to financially emigrate if you are already overseas

The financial emigration process does involve a lot of forms and red tape and for expats living abroad this can be problematic. As South Africa’s first and most experienced offshore financial specialist, FinGlobal has helped thousands of South Africans financially emigrate and the majority of these were done some years after the South African expats had left the country. For more information about the financial emigration process, contact us today.